Ukraine's drone strikes on Russian refineries have crippled the country's diesel exports, undercutting a Trump-Putin deal meant to ease surging fuel prices. Diesel supplies are also squeezed by the war involving Iran, and the IEA warned they will likely stay constrained well into 2027.
Ukraine launched more than 1,000 drones at Russia on Sunday, according to state media reports, in one of the largest attacks this year. The strikes set ablaze an oil export terminal in St. Petersburg. Kyiv has also ended its brief adherence to an energy ceasefire that Trump declared on Oct. 11.
Russian diesel exports fall by more than 75%
The attacks slashed Russia's diesel exports by more than 75%, to 141,000 barrels per day (bpd) in September, compared with 608,000 bpd in the same period last year, according to Kpler data. Strikes on Russian refineries and related oil infrastructure almost tripled to 31 in July from 11 in January, according to Rochan Consulting.
Moscow responded by banning exports in July, then resumed shipments this month to fulfill the Trump-Putin deal. Under that deal, the Kremlin agreed to supply about 75,000 bpd in October and 124,000 bpd in November. Tatiana Mitrova of Columbia University's Center on Global Energy Policy said those volumes are a rounding error compared with total demand.
Harder-to-repair targets
Mitrova said Kyiv now launches swarms of drones that number in the hundreds, compared with dozens earlier in the war. In July, Ukraine hit Russia's largest refinery at Omsk, more than 1,000 miles from Ukraine.
Ukrainian forces have also learned to target complex equipment. A destroyed fuel tank takes just a couple weeks to fix, Mitrova said, but replacing a secondary refining unit requires supply chains outside Russia. She said: "You cannot just order it on Alibaba."
Prices stay elevated
Matt Smith, director of commodity research at Kpler, said the Trump-Putin deal is likely dead in the water without an energy ceasefire. Diesel cost $6.32 per gallon on average Tuesday, nearly 75% above the same period last year, according to AAA.
The Iran war adds to the pressure. Smith said diesel exports through Hormuz are down about 540,000 bpd compared with last year, and global diesel exports have fallen about 1 million bpd. Smith said the tightness is likely to persist and prices are going to remain elevated.
Source: CNBC
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